WHAT IS THEMATIC INVESTING?

Thematic investing seeks to capitalize on long-term trends that cut across economic sectors and geographic boundaries. It recognizes that the world is changing rapidly and incorporates a deep understanding of the underlying drivers of long-term value creation and risk.

Hedge Against Rapid Change
Constant focus on secular changes and disruptive innovation can offer a portfolio hedge in a rapidly changing world and complement traditional index-based strategies.

IDENTIFY THE INVESTMENT OPPORTUNITY

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Innovations often have long flat adoption curves as inertia, network effects, and lack of understanding delay their embrace. During this phase, short-term price movements often reflect volatility more than a stock’s underlying value. ARK seeks to identify the true market potential of innovative companies.

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Performance declines during the gap between the early adopters and mass market acceptance. The market tends to overestimate impacts of short-term events and to underestimate long-term market performance. ARK works to recognize firms that will “cross the chasm” to large rapid growth.

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Many truly innovative products and services are platforms in “winner takes most” markets. ARK looks for platforms of innovation that cut across sectors for maximum potential upside.

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As companies realize the commercial successes of their innovations, they must continue to evolve and differentiate. ARK monitors if a company is reinvesting in future opportunities and identifies possible disrupters.

Evaluate a Thematic Trend

Not every trend represents a thematic investment opportunity. ARK judges secular shifts based on three factors. First, a thematic trend must provide alpha, an opportunity to earn a premium over the market. Second, the trend needs to offer a duration of at least 3-5 years. And third, the trend must be investable, unlike early stage startup innovations or disruptive change facilitated through private or institutional companies.

“Investors have deployed thematic strategies for years; they appreciate the way these allow them to manage risk and ensure that their capital is deployed against the opportunities that best reflect their investment convictions.”

About ARK

Investors should carefully consider the investment objectives and risks as well as charges and expenses of an ARK ETF before investing. This and other information are contained in the ARK ETFs' prospectuses, which may be obtained by clicking here. The prospectus should be read carefully before investing. An investment in an ARK ETF is subject to risks and you can lose money on your investment in an ARK ETF. There can be no assurance that the ARK ETFs will achieve their investment objectives. The ARK ETFs’ portfolios are more volatile than broad market averages. The ARK ETFs also have specific risks, which are described in the ARK ETFs' prospectuses.

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